Around 640,000 people are flagged on a little-known fraud database, making it
hard to secure a mortgage or loan

A fraud prevention register owned by banks and building societies is blocking borrowers from obtaining credit – even though most people don’t even know that their details are on it.

The National Hunter database was set up by lenders in 1993 and is solely concerned with preventing fraud. Lenders that have concerns about customer applications can register them on the database, which can be viewed by 50 member organisations.

Worryingly, companies are not required to notify their customers when they make an entry. At present around 640,000 entries are held on the database, which stay there for up to six years. Unlike credit reference agencies, it does not hold any credit scoring records, credit histories, copies of County Court Judgements or electoral roll information.

Borrowers who are flagged on the register can find it almost impossible to secure credit as a result. National Hunter does allow customers to check their file for a £10 fee, but it doesn’t offer a dispute facility and simply refers unhappy customers back to their lender. It is the lender’s decision whether to reconsider its entry or not.

One Telegraph reader, Alex Helmore, found he was unable to secure a mortgage after Accord Mortgages entered him onto the database.

Mr Helmore, who works at a boarding school and lives on site, decided to buy a home and move off the school’s grounds.

He and his wife found a property nearby and made an offer, which the sellers accepted. The property needed some renovation work which they planned to complete before moving in.

Mr Helmore applied for a loan with Accord, part of the Yorkshire Building Society group. The application was accepted and the searches and conveyancing were carried out, with a completion date set for last September.

But Accord suddenly withdrew the offer after Mr Helmore’s solicitor called to check whether the loan was a residential or buy-to-let mortgage. This prompted concerns that Mr Helmore was planning to let the property rather than live in it, which is not allowed under most residential mortgages.

Mr Helmore and his solicitor wrote to Accord and confirmed that they planned to live in the property but the lender refused to reinstate the offer.

Fearful that delays could cause them to lose the house, Mr Helmore approached Coventry Building Society for a mortgage. His application was accepted but on the day of the survey the offer was suddenly withdrawn.

Some digging revealed that Accord had entered Mr Helmore on the National Hunter database as a “hidden buy-to-let” customer.

“Despite my best efforts Accord has refused to remove us from the register,” he said. “It has since changed our status to ‘other – contact lender’ and has refunded us the fees paid, but we remain, unjustly, on a fraud detection website , unable to secure a loan from other lenders.”

Yorkshire Building Society told Telegraph Money that it was concerned about the solicitor’s phone call, as well as the fact Mr Helmore was not moving into the property on the completion date. However it agreed to review its entry and subsequently agreed to remove it completely.

A Yorkshire Building Society spokesman said: “As a responsible mutual organisation, we have a duty to ensure that members’ money is lent in a secure and sustainable way, without exposing the Society to avoidable risk. We therefore take any inconsistencies in mortgage applications seriously and we only lend to borrowers when we are certain that their intentions are as stated on their mortgage application.”

Barry Brennan, managing director of National Hunter, said it is not up to the register to make judgements about the validity of individual entries. "The data is owned by the members," he said. "We don't have the ability to change the data in any way. We simply carry out an administrative function."